President's Letter
Dear Chesapeake Chapter Members: I would like to start this letter by thanking my fellow board members for their tireless efforts to make the Chesapeake Chapter stronger and add value for you, its members. Please indulge me for a moment as I list them here by name: David Miller – Sandy Spring, Bob Kendrick – BankAnnapolis, Kim Armstrong – Wachovia, Steve Bareford – Federal Reserve, Dan Herr – PNC, Peter Hickling – Sandy Spring, Lance Johnson – First Mariner, Kathy King – PNC, Jennifer Kissner – Provident, Marty Madera – Columbia Bank, Chris Padgett – M&T, Rebecca Sinclair – Presidential Financial, Brian Slagle – PNC, Jo Taylor – Northwest Savings, Vickie Tillman – LaSalle, Wanda Wright – BB&T, and Charlie Ruch – Centreville National. Thank you all! I would also like to thank you our members. RMA is a member driven professional association and without you, our members, RMA would not exist. I cannot stress how important that our members are to the organization. Because of this, we, as your local chapter, continually strive to better meet your needs. In order to understand the ever changing needs our members, the Board needs to stay in contact with the RMA member banks in our area and, in particular, with the Senior Associates of those banks. As one of the Board’s major initiatives in early 2008, our Board members will be reaching out to the Senior Associates to inquire about their needs. Additionally, we will be asking the Senior Associates to identify an Ambassador for their organization who can serve as a second contact to help us stay abreast of your organization’s needs and disseminate information in your organization about Chapter activities. I hope that you have had the opportunity to have joined us recently at one of the local events. As you know, to complement and supplement the programs offered by RMA headquarters, your Chesapeake Chapter seeks to develop programs that seize on the important banking topics of the day and provide opportunities for you to network with your peers. Already this fall we have held an event addressing the sub-prime mortgage crisis, a half day Risk Management Forum, and a purely social event, a wine tasting. In 2008, we will again be sponsoring (in separate events) our popular regulators and senior executive panels, and a very important event given local market conditions dedicated to , a half day real estate forum. Last year, our real estate forum was a huge success with great speakers and a large turnout. This year we expect to exceed last year’s success. If you have not attended an event recently, I invite you to join us at one of these events, you will not be disappointed.
In order to help develop young talent in the industry, our Young Financial Professional (“YFP”) group continues to be an active part of the Chapter. This year, the YFP programming is focusing on career development in a three session series. The series began with an event in December focused on “Excelling in the Workplace”. Two additional events are planned for the Spring. All of the above are provided by our local chapter . RMA Headquarters continues their valuable service to the industry promoting an enterprise-wide approach to risk management that focuses on credit risk, market risk, and operational risk. . Many of you are just familiar with RMA Headquarters because of the RMA Journal and Annual Statement Studies, but they offer much more. RMA Headquarters is heavily involved in offering training including co-sponsored classes with the local chapter. This Fall we have offered four open enrollment events in the local area (Analyzing Business Tax Returns, Analyzing Personal Financial Statements, Understanding and Interpreting Appraisals, and Real Estate Fundamentals) and plan to offer an additional four events in the Spring (Intermediate Real Estate Lending, UCAII: Credit Risk Analysis, Construction Loan Management, and Structuring Commercial Loans I & II). In addition, RMA Headquarters offers regional and national conferences and webinars. And numerous other risk management tools. RMA has rolled out a prestigious certification program for banks, Credit Risk Certification (CRC). RMA envisions the CRC becoming an industry standard for credit professionals similar to the CPA certification for accountants. I invite you to check out their website www.rmahq.org for additional information.This is an exciting time for both RMA headquarters and the Chapter. We are delighted that you have chosen to be a part of it. Please remember that the value of your membership has a direct relationship to your level of involvement. I strongly encourage you to take advantage of all that RMA and the Chesapeake Chapter have to offer. I invite you to contact me directly at thad.ulrich@pnc.com or 410-626-2110 with your ideas, suggestions, and questions, or if you have interest in learning more about leadership opportunities in the Chapter. You can also use the “Contact Us” link in this newsletter, or you can use the “Officers” link to contact a Board member that you know personally. I look forward to seeing you at RMA events and look forward to meeting many of you. Thad Ulrich, PNC Bank
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1031 Reverse Exchange
What is a 1031 Reverse Exchange?
By now, we have all seen or read about 1031 exchanges. However, this article is to inform the reader about a Reverse 1031 Exchange. Actually in 2000, the Department of the Treasury provided guidance and legislation to regulate reverse 1031 exchanges. Since that time and most recently, the number of properties exchanged under this type of deal has significantly increased. What is a Reverse 1031 Exchange?
A reverse 1031 Exchange allows for the purchase of the new or replacement property before the sale of the old or relinquished property. Who holds title?
The Exchangor cannot hold title to both properties at the same time. In this case, an Exchange Accommodation Titleholder *(EAT) acquires the legal title of the new property on behalf of the taxpayer and holds it until the Qualified Intermediary facilitates the 1031 property exchange. This is sometimes called “parking” a transaction, because the title of the second property is held (or parked) while the other parts of a like-kind 1031 real estate transaction takes place, such as the sale of the first property. What type entity does the EAT use?
The EAT is a single member limited liability company created for the purpose of holding the property for the exchange. Can this entity be reused?
No, the entity created cannot be reused or hold multiple properties. What happens when the old (or first) property is sold?
Once the old (or first) property sells, the equity is paid back to the Exchangor for any cash contribution to the new property or to pay down the new property debt. How do you document the 1031 Reverse Exchange?
The EAT and Qualified Intermediary must complete a Qualified Exchange Accommodation Agreement (QEAA). This document sets out the fact that the EAT is holding a property in order to facilitate an exchange under Section 1031 of the IRS Code and Section 1.1031of the Treasury Regulations and Revenue Procedure 2000-37. It also creates an agreement where the EAT and taxpayer agree to report the transactions involved including the buying, holding, and disposition of both properties on both sets of income tax returns as per regulation. What is the time line?
The time limit of 45 days for the identification of the second property under Section 1031 is no longer valid under a reverse 1031 exchange, but the sale and acceptance of the second property must occur within 180 days of the sale. If your client is considering a 1031 reverse exchange, it is important for any taxpayer to get full and impartial legal and tax advice before undertaking such a transaction.
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CCRMA Spring Calendar
March 2008- 12 - Senior Executives Forum
Click here for more information and registration. - 12 - Intermediate Real Estate Lending - Baltimore, MD
Click here for more information and registration. - 25-27 - UCA II: Credit Risk Analysis for Commercial Bankers - Baltimore, MD
Click here for more information and registration.
April 2008- 8 - YFP presents Build Your Image as a Strong, Fair-minded Leader
Details to Come. - 18 - Construction Loan Management: Administering the Construction Loan Process - Baltimore, MD
Click here for more information and registration. - 30 - Real Estate Forum
Click here for more information and registration.
May 2008- TBD - YFP presents Transitioning to Management
Details to Come. - 19-20 - Structuring Commercial Loans I & II - Baltimore, MD
Click here for more information and registration.
June 2008- 11 - Regulators' View of Banking in the Current Market - Baltimore, MD
Click here for more information and registration.
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